Most People Have a Time Preference

question 126

Multiple Choice

Most people have a time preference.Since this is true:

• A) they must earn interest to consume now (save later) and are willing to pay interest to consume later (save now).
• B) they must be paid interest to consume later (save now) and are willing to pay interest to consume now (save later).
• C) they are willing to accept simple interest in the short run but only compound interest in the long run.
• D) they will accept positive rates of interest on checking accounts and negative rates of interest on savings accounts.
• E) they prefer more free time to less free time.

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Definitions:

Process Innovation

Refers to significant improvements in the way an organization conducts its business, aiming to achieve better efficiency, effectiveness, and performance.

Sunk-cost Fallacy

The misconception that one should continue on a course of action because they have already invested resources (time, money, effort), regardless of the current and future costs.

Programmed Decisions

Decisions that are routine and repetitive, often made using predetermined rules and procedures.

False Consensus Effect

A cognitive bias whereby individuals overestimate the extent to which their beliefs, feelings, or behaviors are shared by others.